Flipkart adopts marketplace model

Believing in the mantra of ‘To shop is human and to shop online is divine’, Flipkart has been synonymous with online shopping. With a $1-billion sales target for 2015, it is one of the largest e-commerce players in the country with leadership in categories such as books and consumer electronics. E-commerce is on the crux of a revolution with more and more people going online.

Several e-commerce players have shifted to the marketplace model from the inventory-led model after spending huge amounts of cash per transaction in an inventory-led model. With foreign direct investment (FDI) favouring the marketplace model, even Flipkart announced the launch of a marketplace platform bringing buyers and sellers in direct contact.

Ravi Vora, Sr VP – Marketing, Flipkart said, “We have always intended to be a marketplace model. We wanted to build the habit of shopping online in India but the major hurdle was consumer trust. To get that trust, we had to provide a superlative consumer experience. We have successfully done it and having built a certain critical mass of online shoppers in India, we are slowly opening the platform for other people to come and leverage it because as a single player one is not able to provide all the collection and the best pricing to all the consumers. We have sellers who excel in different categories. So, we are slowly opening it up to sellers to provide their products to the audience that we have built so far. If we are able to control the situation well, it will be a win-win for both the consumers and the sellers.”

The lifestyle play
Flipkart recently made its foray into the fashion and lifestyle category. While the category has gone live for a couple of months now, the brand is officially launched its new offering now. “Globally, lifestyle, clothing or fashion happens to be the largest component of e-commerce. We have built our credentials on books and electronics so far where 60-70 per cent of the audience is shopping with us. After books and electronics, fashion is the largest vertical. Though we are slightly late in entering the fashion segment where there are existing players such as Myntra and Jabong, our task is to make people comfortable with shopping for fashion on Flipkart. Our aim is to build a leadership position in this category as well,” Vora said.

“There are challenges given the different nature of this vertical when compared to others. But the trust and superior service credentials we have built in the minds of our customers should be able to help us bridge that gap quickly,” he added.

According to him, Flipkart doesn’t aim to be fashion experts though the brand understands fashion and aims to provide everything to meet the customers’ expectations. “We are a horizontal player and we want to do justice in the categories that we are operating,” he stated.

The look and feel of the website has undergone changes to make it more visually appealing. It is also launching brand stores where customers can shop directly for their favourite brands.
However, books will remain a priority for the brand because on the volume front it drives large amount of transactions. “The revenues are coming down with addition of more verticals but from a customer interaction point of view, books will remain a category of priority for us,” he explained.

Electronics are the major revenue drivers for the brand which includes tablets, cameras, mobiles, computers, and slowly lifestyle has picked up with clothing, accessory, footwear, bags and watches being the main drivers.

Fashion’s new address
The brand officially launched its new offering with a new campaign titled ‘Fashion has a new address’ in true Flipkart fashion. This campaign continues with the kids theme – but for the first time focusses exclusively on a category. Flipkart as a brand has built a strong association with kids in its earlier campaigns. The brand has taken the idea and its familiarity forward to get the customers comfortable with shopping for lifestyle products on Flipkart.

Speaking on the long association with kids, Vora pointed, “The strategy has worked very well for us and it has become a unique language where people immediately associate the execution around kids to Flipkart. A brand’s purpose gets fulfilled if people are able to relate the commercial to the brand without even naming the brand. Having seen the success, we will continue with the property as long as it works for our consumers.”

Cash-on-delivery (COD) still remains the most viable option for the brand because of the hurdles faced in online payment options. Almost 65 per cent of the orders placed are through the COD model because of the lesser penetration of credit cards and online payment methods. A lot of players are facing problems because customers don’t feel like paying for the product online once they see it in the COD model.

“Fortunately, this has been negligible for us and we have managed to live with whatever small numbers that we get back. Hence, it’s not a big challenge for us. It all depends on the way the products are presented to the customers and the way it is delivered. If you manage the experience well, then the whole return rate will be very much in control,” he said.